Question

In: Economics

Suppose the demand and marginal cost equations for a monopolist are as follows: Q = 6600 – 2P MC = 2Q.

a. Find the inverse demand equation and the marginal revenue equation.

b. Find the profit maximizing quantity and price for this monopolist (remember to set MR = MC and solve for Q).

Expert Solution

a)

the inverse demand is:

Q=6600-2P

2P=6600-Q

P=3300-0.5Q

the marginal revenue is:

MR=3300-Q ............ An MR curve is double sloped than an inverse demand curve.

b)

The profit is maximum at MR=MC

3300-Q=2Q

3Q=3300

Q=1100

P=3300-0.5*1100

P=2750

the price is $2750 and quantity is 1100

Rahul Sunny answered 2 years ago

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